Direct mail printers will only be slugged with a small postage price hike as Australia Post moves to mollify the outraged industry with a 25 per cent discount.
The monopoly mail carrier has agreed to slash the planned increase to its promo post product, used for small-sized bulk promotional mail campaigns, in a bid to prevent crashing volumes.
Promo post was to rise by 24.8 per cent on January 4 as part of huge bulk mail price hikes, but will now only jump 8.8 per cent, and be 25 per cent cheaper than pre-sort.
The new price, assuming Post gets its $1 stamp proposal past the ACCC, will be 59.6c for same state, 61.5c for interstate and 64.1c for residue – all sent on regular delivery time.
Only 2.8 per cent of mail volume is promo post, but that is expected to rise after the discount as pre-sort makes up just over half of all mail volume, and 70 per cent of it is sent on regular – with massive hikes coming.
[Vote for AusPost CEO Ahmed Fahour in the 2015 ProPrint Power 50]
Post says the discount will last until mid-2017 and will ‘provide significant growth opportunities for direct mail businesses’.
The discount is a result of industry consultation forums held last week between the mail carrier, printers, mailhouses, unions, and postal workers.
It is part of a wider ‘support package’ that includes capping the priority stamp for ordinary postage at 1.5 times regular (initially $1.50), and continued discounts for seniors, charities and greeting cards.
Blue Star chief executive Matt Aitken says he has noticed a marked change in Post’s behaviour in the past two weeks, and says it is making an effort to be consultative.
“Post is trying to work with industry more, and is doing its best to better understand our concerns and discuss how we can all keep mail sustainable,” he says.
“I think this decision will provide more revenue opportunities for direct mail.”
Lamson Paragon general manager Rodney Frost says the new pricing is ‘certainly better than what was previously proposed’ but that mail volume will still fall.
“Kudos to Australia Post for listening and doing something about it in this promotional area. Accelerated volume decline will still be the outcome of this increase, but in saying that it is a very complex challenge with the cost structure of Australia Post.” he says.
“One potential opportunity to reduce volume decline is to delay the increase until July due to budgets already being set until June 30.
“The generators and corporates could then start to build their marketing budgets with this knowledge now. It is a big ask from Australia Post though, considering recent results that were announced.”
Australia Post chief executive Ahmed Fahour says those at the forum agreed on the need to work together to reform the sector to ensure a sustainable, world-class letters service can be maintained.
“With reform, our mail service has a strong future and we will continue to have an open dialogue with all parties involved on implementing these changes,” he says.
Former Victorian Senator Helen Kroger, who chairs the industry working group, says: “The goodwill shown by all stakeholders through this productive, consultative process will hopefully help the sector achieve long-term sustainability.”
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